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Thousands protest Australia Day in Melbourne earlier this year

A council in Melbourne has voted to stop celebrating Australia Day because of Aboriginal cultural sensitivities.

The City of Yarra made a unanimous decision to drop all references to Australia Day and cease holding citizenship ceremonies on 26 January.

Australia Day is the anniversary of the arrival of Britain's first settlers in 1788, an event many indigenous Australians refer to as "Invasion Day".

Prime Minister Malcolm Turnbull criticised the council's decision.

"The council is using a day that should unite Australians to divide Australians," he said in a statement.

"An attack on Australia Day is a repudiation of the values the day celebrates: freedom, a fair go, mateship and diversity."

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Media captionWhy is Australia Day controversial?

The council said it had made its decision following months of consultation.

"We have been informed very consistently from the Aboriginal community in Yarra and more broadly that it is not a day of celebration for them," Mayor Amanda Stone told the Australian Broadcasting Corp.

"It is very hard to reconcile having a day of national celebration when one whole sector of the population feels excluded."

However, she said the council had also taken many calls from people opposing the decision.

Calls to shift Australia Day have grown in recent years. This year, "Invasion Day" protests were held around the country.

Last year, a Western Australian council also attempted to shift its celebrations but reversed its decision following pressure from Mr Turnbull's government.

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A protester holds a message written on an Aboriginal flag

Mr Turnbull said he acknowledged the day was "complex for many indigenous Australians", but the "overwhelming majority" of Australians believed the date should not change.

According to a recent survey, more than 70% of Australians identify the day as important to them, but only 43% could name its historical origin.